SMEsPRODUCT DEVELOPMENT SOLUTIONS

LIMA Programme2020

“SMEs represent an important part of the South African economy. With almost 670,000 SMEs, they are the engine of the economy with a contribution of 21% of the GDP.”

Gunther RempelSenior ConsultantMunich Re

03 September 2020Gunther Rempel – Munich RE Global Consulting

SMEsPRODUCT DEVELOPMENT SOLUTIONS

WHY SME?

Why SME?… and how Munich Re can provide value to your clients

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SMEis not …

but

SMEis …

a defined service a defined business segment a product

a P&C product bundle entering point into the market for commercial insurance more ready-made then tailor made

So how can Munich Re / Global Consulting (co)create value?

… by being a specialist for P&C bundle products having a product offering transferable to your market and knowing about the key success factor and major failures in commercial lines

Why SME?SMEs in Kenya, South Africa and the Global Economy

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According to official surveys almost 7.4million firms (1.6m licensed & 5.8m unsilenced) marked as SME in Kenya, approx. 2.2 millions in ZA (670,00 formal & 1,500,000 informal)

Small equals fewer than 50 paid employees Medium-sized with at least 51 but max 99 or 250 (ZA)

employees.

providing substantial contribution to employment offering 67% of total permanent, full-time employment according to

World Bank report stats contribute between 50%-60% of value added in the OECD basis come in all shapes and sizes and have different, and sometimes

complex, needs are an attractive market for insurers with higher policy premiums than

personal insurance1 “Small vs. Young Firms across the World: Contribution to Job Creation, Employment, and Growth”, World Bank 20112 KNBS 2016 The SME Survey/ BER 2016 – The SME Sector in ZA

Share of businesses per number of employees in ZA / Kenia ²

Employment contribution by SMEs (<250 employees)1

78%67%

59% 66%

Lower IncomeCountry

Lower MiddelIncome Country

Upper MiddelIncome Country

High IncomeCountry

SMEs …

0%

100%

Mirco Smal Medium

Share of SME´sKenia

SouthAfrica

GDP contribution for SME sector 28.5% for Kenya.

Approx. 21% of GDP in South Africa, which is likely to be influenced by large contributions from mining operations to GDP in ZA).

Identification of most promising segment in your marketTargeting the right clients to make the right offering

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Data on SME need to be further investigated for identification of target

Our offering

Munich RE IT E2E Insurance suite Munich RE SME Services

Frontend Backend/Policy Admin System Pricing Engine Dashboard Claims handling

Market segmentation + target groups SME Product Warehouse SME Product Concept Support in creating product wording + UW

Guidelines Pricing and monitoring support

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Go LivePROJECT START

Client segmentation and product definition

TIMELINE:

you are already selling an SME bundle and you want to try out a new product design and new sales channels you are already into commercial insurance, but you do not have a SME bundle product yet and want to accelerate your go-to-market approach

This is the right Service for you, if

Our SME offer combines a set of Munich RE initiatives and expertise to a full cycle SME offering of high relevance to your clients

Goal is to co-create and go-live with an initial SME offering within 6 month as starting point for digital sales in your SME market

Offering can be adopted to your specific needs choosing from a pre-defined set of product and service components:

Definition

AFTER ̴̴ 3 MONTHSTechnical Infrastructure

AFTER ̴̴ 5 MONTHSTest + Implementation

AFTER ̴̴ 6 MONTHS

Creating value for you and your clientsFull cycle SME Offering targeting small companies

Creating value for you and your clientsFull cycle SME Offering targeting small companies

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Modules developed together with Munich RE. Implementation on client's system using MR pricing systematic for monitoring

Implementation on cient's Frontend and Policy administration sytem or in a sand-box environment provided

A “Brick” can be: A peril (e.g. Fire) A coverage (e.g. Glass) An Add on (e.g. Loss of rent) A value-added Service (e.g. Helpline)

Attached to a Specific Wording Limits & Deductibles Business Rules (e.g. only in combination

with xy, only for occupancy code xy) Needed parameters of risk assessment

Brick

Helping to set up a monitoring solution or building a monitoring solution on MR plattform

Advice on processes and claims TPAs to form a basis for later fraud solutions + tariff and wording adaptation

Refinig initial pricing with claims/ protfolio data

A predefined set of product components To build and change a product offering fast and easy + supporting an MVP approach Highly scalable

Product Warehouse

Brick

Initial Brief Build up Product Constituents

DefineDistribution

ChannelIdentify Customer

Segment and Occupancies

Product Concept

Initial Pricing

Build and Test Prototype with

Customers

IT / Systems Architecture

Go to market strategy

Define Objectives Product Concept Design Implement

Customer Interview and validation

Sprints (Development and demo)

Define Launch Scope

Design Operational Processes

KickOff

Market Analysis and Data assessment

InnovativeFeatures

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Creating value for you and your clientsCo creation design process

Developing a SME Value PropositionOur SME Product Concept

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Developing a SME Value PropositionOur SME Product Concept

14Munich Re - Strategic Partnership Exploration

Key Success factors in SME businessSales Excellence

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USP of tied agents is their advisory expertise

Willing to give discounts at point of sale

Willing to upsell and cross: Bundle products ideal for this sales channel

Most price competitive sales channel

Aggregators mostly rate the different products. Product design fit to aggregators rating of high relevance

Tied Agents Brokers Aggregators

USP of brokers is a good market overview

Require a competitive first quote from insurers (no later discounts)

Rather sell a single coverage from one insurer then a bundle

Banks

Selling insurance is not the main expertise of banks but willing to create new rev. streams

Products need to be fast+easy to sell

Good technical integration is a key success factor

Vast majority of P&C business worldwide still sold via intermediaries Aggregators, comparing different offerings for brokers and also for direct sales to end customers become more important Each sales channel has its own demands concerning product design, rates and discounts

Knowing and selecting the relevant sales channels for your offering is crucial for business success

Fast and convenient quote essential

Known brand + good marketing relevant to get traffic on the landing page

Purchasing online, SME companies still want personal advice available

Direct Sales

Creating value for you and your clients… why Munich RE is the right partner to develop the SME Segment

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Other Munich Re entities•Data (Data Hunting)•Platforms (Frontend, Policy Admin, Pricing Engine, Dashboard)

•Special Know-how (for example IoT)

Client Management•Access to the experiences of insurers•Provide reinsurance capacity•Enhancement of client relationship to compensate the efforts invested by MR

Munich Re / Global Consulting•Product development expertise incl. customer segmentation & monitoring

•International market expertise + best practice

•Project management know-how

Client / Strategic Partner•Local market expertise•Capacity + motivation for co-development

•Pricing expertise•Risk Appetite

ClientGlobal

Consulting

Other Munich

RE entities

Client Manager/

UW

Create profitable growth by building up a new SME or enhancing an existing SME offering profiting from the international know how and expertise of Munich RE and further being your partner for the insurance industry going beyond reinsurance

What’s in for you?

Sharing the riskSharing the risk

Being a strategic

partner for Munch RE

Being a strategic

partner for Munch RE

Product expertiseProduct

expertise

Services and IT Infra-

structure

Services and IT Infra-

structure

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Use Cases

Property Insurance

Online property insurance in France Cooperation between Munich Re and French

InsureTech startup Go live in Jul 2019 “We can now onboard, control and adjust. This will be crucial

when players like Lemonade come to us. So once again, thanks for the great work and collaboration“ – Patrice Cohen

SME Online Insurance

Partnership between Munich Re and InsureTec start-up NEXT Insurance

Delivery of SME online insurance for US market, one-stop-shop business approach

$100M GWP, 1300 professions covered “Next’s data- and technology-driven business model offers

outstanding growth opportunities, which we harness together. Next Insurance benefits from our expertise in primary insurance and reinsurance.” – Joachim Wenning

XYZ Versicherung – SME products

German Start Up offering digital SME insurance Consulting project to co-develop innovative

products for specific target groups including IoT Kick-Off in May 2020

Comprehensive Consult ing project in the Saudi market

SME portfolio and process validation focused on pricing methodology as well as risk management and claims

Optimization of insurance process and portfolios across the whole value chain (pricing, underwriting, claims, ongoing portfolio monitoring)

Customer Success StoriesMunich Re partners with Insurance and FinTech Partners to drive new, digital business models

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France USA

Saudi-Arabia

Germany

Thank you for your attentionMunich Re / Global Consulting

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